It’s never easy to make a budget work. With some families reduced to one meal a day and rising debts as the cost-of-living crisis continues, there’s never been a more critical time to start managing your money more effectively.
We’ve outlined a few practical tips to help you create a financial plan that works for your entire family, allowing you to get through the month with as little stress as possible.
Why should you make a budget?
Having a working family budget can help relieve financial stress.
With a clearly defined budget, you’ll quickly and accurately be able to identify how much money you have to work with. Budgeting also allows you to refine and improve your cash management by making your mistakes and setbacks much more transparent.
Step 1: Work out where you are now
Before you make a detailed plan for your budget, you’ll need an idea of your current finances.
Consider all your incomings, including your wages and any additional support, like Universal Credit, and then deduct all outgoings. To gain an accurate view of how much you have to work with every month, you need to be realistic.
Make sure you factor in every transaction, regardless of how minor it might seem. Plus, if you’ve taken out a credit card, short term loan, quick online loan alternative or borrowed money at all, you’ll need to factor any outstanding repayments into your outgoings.
Step 2: Set a goal
Whether it’s the holiday you’ve always dreamed of or you simply want to be able to buy Christmas presents without depleting your entire November wage, you’ll need to have a tangible goal.
Try to set aside money for family days out and create separate savings pots for different purposes. If you have teenage children, it might also be worth setting up a savings account ready to help them move away or start studying at university.
Step 3: See where you can cut back
We’re all guilty of overspending from time to time. However, if you regularly find yourself splashing out when you can’t really afford to, it could quickly turn into a problem.
Hold yourself accountable; whether it’s opting for an expensive takeaway rather than using the ingredients in your kitchen or overindulging when you take the children (or yourself!) out for a treat, bad habits need to be squashed.
To budget effectively, you should only allow yourself to spend when you need to. If retail therapy is an essential part of your routine, try to shop more sustainably or choose retailers with lower prices.
Step 4: Save for the future
From surprise vet bills to unexpected obstacles further down the line, it’s important to have your own back in an urgent situation. No matter how big or small your budget might be, it’s important to keep a little bit of money aside every month for emergencies.